South Africans paying too much for private healthcare

South Africans are paying too much for private healthcare, the country’s antitrust watchdog said on Thursday, adding patients are sometimes prescribed treatments they don’t need by an industry with limited competition.

09 July 2018 | Economics

“One of the challenges of this, from a competition perspective, is that it affords the big-three hospital groups “must-have” status in bargaining for contracts with funders which reduces funders’ countervailing power” - Sandile Ngcobo, head of investigating panel, Competition Commission

Presenting its findings of a four-year investigation into the sector, the Competition Commission said private health providers sometimes recommended pricey treatments unnecessarily.

“This happens, for example, if a doctor orders more tests than are absolutely necessary or conducts a Caesarean section when it is not absolutely necessary to do so,” said Sandile Ngcobo, a former chief justice who headed the Commission’s investigating panel.

The findings could boost health minister Aaron Motsoaledi’s efforts to cut costs for patients as the government works towards implementing a nationwide medical insurance plan that aims to give the poor greater access to healthcare.

South Africa spends roughly 9% of gross domestic product on healthcare but more than half of that is spent by about 16% of the population with private medical schemes, according to the health department.

The inquiry also found there was limited competition in both the healthcare insurance and the private hospital markets.

South Africa’s private hospital industry is dominated by Mediclinic International, Life Healthcare and Netcare, while the medical insurance sector counts Discovery Ltd , Liberty Holdings and MMI Holdings among the biggest players.

“One of the challenges of this, from a competition perspective, is that it affords the big-three hospital groups “must-have” status in bargaining for contracts with funders which reduces funders’ countervailing power,” Ngcobo said.

To address the concentration, the Commission proposed divestments and imposing a moratorium on issuing new licences to the three large hospital providers until such time as their national market share is no higher than 20%.

It also proposed setting up a regulator to set tariffs for health services after extensive consultation with stakeholders in a public forum.

South Africa already uses a regulator to set the price of electricity, the bulk of which is supplied by utility Eskom.

Stakeholders have until September 7 to comment on the findings and proposed recommendations.

Ngcobo and his team will consider the comments and, if necessary, revise the report. The final report and recommendations are expected to be published by the end of November.

-Nampa/Reuters

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